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Citadel Securities Building Cryptocurrency Trading Marketplace

Key Insights:

  • The firm is working with Virtu Financial to build its crypto platform.
  • It aims to create more efficient access to crypto liquidity for institutional investors.
  • CEO Ken Griffin has reversed his pessimistic outlook on the asset class.

The American market-making firm founded by billionaire hedge fund manager Ken Griffin is building a cryptocurrency trading platform in collaboration with high-frequency trading firm Virtu Financial.

Citadel Securities is the sister company to hedge fund giant Citadel. It is also working with crypto venture capital firms Sequoia Capital and Paradigm, according to reports citing unnamed sources on June 8. Sequoia and Paradigm participated in Citadel Securities’ $1.15 billion funding round earlier this year.

The new “cryptocurrency trading ecosystem” will be designed to create more efficient access to crypto asset liquidity for institutional traders. The firm appears to be unfazed by the deepening bear market in the crypto sector, which has seen total market capitalization decline by almost 60% since November 2021.

No Fear of The Bears

There has been remarkable interest in the asset class from financial institutions during the last bull market. They usually plan for longer-term returns, so are unlikely to be deterred by the current crypto market conditions, which have happened several times before. If anything, bear markets allow for more significant opportunities for profits if investing in assets at depressed prices.

According to the source, who spoke to Coindesk, the Citadel consortium will be joined by additional wealth managers, market makers, and industry leaders expected to be part of the platform ahead of launch. They did not specify a timeframe for the launch, however.

The source added that the current crypto market structure is “deficient and inhibits wider adoption from a lot of investors” before continuing to explain:

“It’s more of a crypto trading ecosystem or marketplace than an exchange. It’s going to take on the exchanges by building a better mousetrap.”

The firm has also been hiring executives to build out the crypto stack on the quiet.

Virtu Financial is a market maker for crypto derivatives products and exchange-traded funds (ETFs) in Canada. According to reports, it also works closely with the Coinbase and Gemini exchanges.

Billionaire U-turns on Crypto

Griffin compared Bitcoin to Tulip Bulb mania in 2017 when the asset was trading at around $10,000. However, the billionaire has made a U-turn on his stance towards crypto assets, recently telling Bloomberg in March that he made the wrong call by being a naysayer. At the time, he stated:

“Crypto has been one of the great, great stories in finance over the course of roughly the last 15 years and, I’ll be clear, I’ve been in the naysayer camp over that 15-year period,”

In November 2021, Griffin touted the properties of Ethereum (ETH), postulating that assets based on the network would eventually replace Bitcoin (BTC) due to higher transaction speeds, lower costs, and a much lower environmental impact.